Billionaires Build

Key highlight

All billionaires could have stopped sooner — gotten acquired or handed off the company. The ones who become really rich are the ones who keep working, and what keeps them working is not money but that there's nothing else they'd rather do. That, not exploiting people, is the defining quality of people who become billionaires from starting companies.

Highlights (7)

"If I had to decide whether to fund startups based on a single question, it would be 'How do you know people want this?' The most convincing answer is 'Because we and our friends want it.'" Even better if you've shipped a crude prototype your friends are already using and spreading by word of mouth — that flips YC from default no to default yes.

Most paths to a huge market run through a "larval market" — a small but growable beachhead. Apple in 1976 is the canonical case: almost no one wanted a personal computer, but the founders did, and they were living at the leading edge of a change that would eventually pull everyone else along.

The ideal founder profile is people "living in the future" building something they themselves want. Wozniak wanted a computer, Zuckerberg wanted to engage with college friends, Larry and Sergey wanted to find things on the web — being at the leading edge means more people will want it later.

Don't turn the YC interview into a pitch. Interviews are 10 minutes because partners need random access to dig into whether you know what you're talking about and aren't lying — delivering prefabricated pitch blobs instead of answering the actual question is the worst possible move.

When asked what could go wrong, the worst answer is "nothing." Go into gruesome detail — that's what experts do. Partners already know your idea is risky; a good seed bet looks like a tiny probability of a huge outcome, and pretending otherwise marks you as a fool or a liar.

The Airbnbs' cereal story — funding themselves by selling Obama- and McCain-themed breakfast cereal — was the single biggest factor in YC's decision to fund them. It seemed irrelevant to the founders but was fabulous evidence of resourcefulness, determination, and that they could work together.

Exploitative founders usually start by exploiting their cofounders, which destroys the foundation of the company. Then they move on to users — but early adopters of a real startup are the hardest people in the world to fool. The best outcome is propping up the deception long enough to trick an acquirer, and those acquisitions are never very big.